Bringing together IFRS and Solvency II

The postponement of Solvency II and planned publication of a finalised IFRS for insurance contracts (IFRS Phase II) late 2014 or early 2015 once again opens up the potential to bring the implementation timetables for Pillar 3 and IFRS Phase II closer into line.

Your company would have around three years to implement IFRS Phase II once it’s finalised, but you can choose early adoption and therefore run preparations in parallel with
Pillar 3.

Closer alignment would open up valuable synergies in data management, modelling and investor relations and avoid the expense and disruption of digging up the road twice.

But it’s important to note that while there are conceptual similarities between Solvency II and IFRS Phase II, there are also a number of key differences in areas ranging from contract boundaries to the basis for discounting. So it will be important to identify any divergence and be able to explain the reasons. If you don’t, you could face awkward questions from analysts and investors.